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California Eminent Domain: A Guide for Small Business Owners

By Peterson Law Group on October 10, 2023

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Eminent domain is the right of the government to take private property for public use. “Condemnation” is the formal act of exercising the power to transfer title to the subject property. Small business owners facing eminent domain pressure may encounter challenges and concerns. Condemnation can cause a business to lose one of its main assets. A business owner who purchased a property years earlier may have to pay significantly more for a comparable space. If the business owned the building outright, the company may have to take on mortgage payments to relocate.

How Can Eminent Domain Affect a Small Business?

The government can exercise its power to claim rightfully owned property to enable many different types of projects. Commercial properties or a business itself can be jeopardized by eminent domain. Business owners may find themselves facing condemnation of the properties from which they run their operations. It may be unrealistic to challenge eminent domain, in which case business owners must shift their focus to the compensation they receive for the property.

What Is the Legal Process When the Government Acquires Private Property for Public Use?

If your business is facing condemnation, it is essential to consult with an experienced eminent domain lawyer and gain an understanding of the eminent domain process. The basic steps are as follows:

  • The condemning government agency hires an appraiser who inspects and appraises your property.
  • The agency makes a (usually lowball) offer for the purchase of the property.
  • If negotiation with the condemning agency does not lead to an agreement between the parties, a public hearing is scheduled, during which the agency must prove it is necessary to condemn the property for the public good.
  • The agency files a complaint against you in Superior Court and serves you with a summons and complaint. You have the right to challenge the complaint, although it is likely to be overruled.
  • The agency deposits “probable compensation” and files a motion with the court for prejudgment possession, to which you have the right to object.
  • If the motion is approved, the agency may take possession of your property within 30 days.
  • Your attorney obtains appraisals and expert witness testimony, made available to the condemning agency, to establish the property’s fair market value.
  • The parties may reach an agreement through mediation. If they fail to do so, the condemning agency will make a final offer.
  • A trial may be held to determine the fair market value of the property and to hear any other issues.

How Can Small Businesses Protect Their Rights and Interests Under Eminent Domain Pressure?

Skilled legal representation is critical for navigating complex eminent domain proceedings. Under California law, “just compensation” must be paid for private property taken for public use. Property owners may be entitled to compensation for the fair market value of the property, severance damages, fixtures, equipment, improvements, pre-condemnation damages, and relocation. As “fair market value” has a specific and unique definition under eminent domain law, it is essential for business owners facing condemnation and their attorneys to work with appraisers who have experience with preparing eminent domain appraisals and testifying in depositions or at trial.

We Know Eminent Domain and We’re Here to Help

At Peterson Law Group PC, we have extensive experience handling California eminent domain matters. Our Irvine eminent domain attorneys emphasize open and frequent communication so our clients always know what progress is being made and where they stand. Our accomplishments in the areas of eminent domain, inverse condemnation, and land use have been featured in prominent media outlets, such as Forbes magazine.

If you are a small business owner facing eminent domain pressure, contact us today at (949) 955-0127 to learn more about your opinions and rights under the law.

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